Maximum Medium: Social networking strategies work for you when you work hard on them

When one gets down to implementing social media in business, it first appears that there is nothing more to it than posting some videos on YouTube, maintaining a fan page on Facebook and regularly sending out tweets on Twitter. This is as far from the truth as it can get. The reason for such a belief is that social networks such as Facebook have become wildly popular, misleading people into equating social media implementation with just using these popular sites.

For social media's best utilisation, businesses must adopt a systematic approach, beginning with the realisation that the use of social media transcends marketing, although that remains the most important application. Social media finds definitive use in functions as diverse as product development, customer service and talent management. Depending on its needs, a firm may decide to start its social media journey by incorporating it in one or more business functions. A good example of a firm that uses social media for product development is Clorox. It uses a website called 'Clorox Connects' which enables customer participation in the creation of new product ideas.

This process is made very engaging with an idea borrowed from video gaming: People who give good ideas are awarded points and on accumulation of requisite points, they are allowed to post ideas on problems requiring a higher level of creativity and knowledge.

After the firm selects the business functions, it now has to implement social media in these areas. The challenge here is that since the business must present a single face to the outside world, the social media activities run by different departments must be well co-ordinated with each other. This requires setting up of appropriate governance mechanisms for collaboration between different departments and creating a technological architecture that allows for a single source of data that is updated in real time. At the heart of this architecture is a CRM type system with at least some degree of integration with social platforms such as Twitter.

This helps to combine the information already available in the CRM systems with the data emanating from social networks. This golden combination of data literally holds the key to the next level of competitive advantage. This is not easy because firms must first wade through the plethora of technological options available in the market. Second, one also needs a communication tool integrated with a social media activity dashboard to allow for effective collaboration across departments.

Once the systems have been configured, it is time to manage social media activities in real time. The very first principle to take into account is that traditionally, companies have been used to taking the lead in informing their customers. Social media turns that thinking on its head. Instead of rushing to inform your customers, it is now better to first listen intently to what they are saying, and then disseminate the requisite information. Technology can provide assistance – tools such as Webtrends or weetdeck can help decipher trends in consumer behaviour. Real-time monitoring of customers' feedback will help in dealing effectively with negative situations.

This is critical because negative sentiment can quickly snowball into a huge risis with a potential to damage a brand that has been carefully built over many years - as seen from Nestle's experience.

When Greenpeace activists started a smear campaign against Kit Kat chocolates due the use of palm oil, Nestle was caught napping and the consequences were telling. Finally, to establish the efficacy of social media, just like any other business investment, its value must be measurable. Common metrics such as the number of Facebook 'likes' are useful to gauge the extent of customer engagement, but do not directly reflect financial value.

Hence it is important to choose the right set of metrics that capture value creation due to social media activity in the context of a particular business. One must keep the confounding effect of extraneous factors in mind. For example, increase in sales in a quarter is the combined result of all the marketing activities a firm undertakes and may not only be attributed to social media.

Thankfully, it is possible to take care of this problem relatively easily, using basic statistical techniques, provided one is careful to collect the right type of data. Finally, it is very important to know and understand the difference between correlation and causation. This implies that just because sales and social media activity are both growing simultaneously, it oes not necessarily mean that sales are growing due to social media activity.

A third factor such as a competitor shutting shop may be responsible for growth in sales as well as in the social media activity of the firm. If this is indeed the case, one cannot rely on social media as directly causing as-good sales in the future, as the third factor may not be present at that time. Dealing with this kind of issue is more complex, but the best approach is to see if one can rule out such 'third' factors from knowledge of the context. If this is done, causation is established.

In conclusion, it is true that adopting social media requires diligence and hard work but done systematically, one can be successful. If you believe that the competitive advantage for the future comes from people, all the work may well be worth it.